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Direct shipments to Europe open new horizons for RMG exporters

Direct cargo service to Europe emerged as a blessing for the country’s apparel export as it would reduce lead time, a hurdle for exporters in grabbing work orders. The container vessel will take 16 days to reach its destination compared to 40 days through the transshipment route used earlier.

On February 7, the first international cargo ship carrying Bangladeshi export containers left the Chittagong Port for Italy, which connected Europe directly.

Bangladesh-Europe-trade-scenario-direct-shipment
Figure: Bangladesh-Europe trade scenario and direct shipment benefits.

On the day, direct shipping service between Bangladesh and Europe started with the voyage of Songa Cheetah for Italy from the Chittagong Port.

On the other hand, the container ship Spica J will leave Chittagong for Rotterdam port in the Netherlands, by introducing a new direct freight route between Bangladesh and the northwestern European country. It will be the fourth direct shipping service from Chittagong since February this year.

The European Union is the largest importer of Bangladeshi apparel goods. According to Export Promotion Bureau (EPB) data, Bangladesh earned $21.74 billion exporting apparel goods to the EU, which is 60.71 percent of the country’s total apparel exports of $35.81 billion in 2021.

“Direct shipping to Europe will bring multifold benefits for Bangladeshi exporters, mostly apparel as it will reduce lead time, which is crucial for exporters to compete with global players,” Mohammad Hasan, Managing Director of Cotton Group, an export-oriented apparel manufacturer, told the Textile Today.

In the fast-fashion business, lead is very important. In case of long lead time, buyers sometimes shift work orders from Bangladesh to other countries. So, if we can continue direct shipping and increase the number of vessels, it will help to attract more buyers, said Hasan.

In addition to this, it will also increase pour capacity and the government should focus on more direct shipping with other countries and regions, he added.

Meanwhile, direct shipping will also reduce costs of transportation at least by 30 percent.

“Shipping cost, as well as time, are barriers to becoming competitive in the global exports markets. Our close competitors like Vietnam and Cambodia enjoy a shorter lead time and they are more competitive than us,” Bangladesh Garment Manufacturers and

Exporters Association (BGMEA) vice president Shahidullah Azim told Textile Today.

So, the direct cargo service will be a blessing for exporters as it cuts costs and lowers times, said Azim.

On the other hand, direct cargo service will make the global buyers happy as they will get their products delivered within a shorter time at an affordable cost, he added. They also will be interested in Bangladeshi products because of faster delivery.

“Experts and economists also opined that the move is a good initiative and it will help the country to enlarge export volume,” Khondaker Golam Moazzem, research director at Centre for Policy Dialogue (CPD) told the Textile Today.

For reaping the most benefits from the initiative, the government has to widen the network and increase the number of freight so that more exporters can avail the direct shipping service, said Moazzem.

As the export volume and value is growing faster and the size of Bangladesh’s exports and imports are increasing gradually, it will help to tackle the growing challenges of shipping, he added.

According to Export Promotion Bureau data, apparel exports rose by 35.98 percent to $35.36 billion during the July-April period of the current fiscal year.

On the other hand, the country’s overall export earnings stood at $43.34 billion, up by 35.15 percent during the July-April period of FY22.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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